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Opinion and Insight

JWT Innovation Group Reveals Whats in Store for 2017

JWT's Innovation Group looks into what will make the 2017 consumer tick

JWT Innovation Group Reveals Whats in Store for 2017

J. Walter Thompson’s Innovation Group has unveiled its third annual ‘Future 100’ report, predicting trends such as Vagina-nomics, Artificial Nature, DNA Tourism and Nootropics in the following areas: Beauty, Brands & Marketing, Culture, Food & Drink, Health, Lifestyle, Luxury, Retail, Tech & Innovation, and Travel & Hospitality. 

Lucie Greene, Worldwide Director of the Innovation Group, said: “Keeping up with shifts in the world today means keeping a pulse on what’s happening and also having the future vision to anticipate what’s to come. So what makes the 2017 consumer tick? What would the 2017 horoscope for consumer behaviour look like? We hope ‘Future 100’ offers brands, marketers and consumers alike, the answers to those questions.”


Brexterity

First it was the Marmite scare. A price dispute between Tesco and Unilever over the polarising breakfast spread grabbed viral headlines in October 2016, worrying devoted fans that it might disappear from British supermarket shelves.

Ultimately, Marmite remained in stock, but in the long term, consumer prices in a Britain with a weakened pound suggest future declines in buying power. Unilever’s chief financial officer Graeme Pitkethly told investors on an earnings call that “prices should start to increase to cover the cost of imported goods due to weaker sterling.”

In November 2016, Toblerone began shrinking the size of its famous triangular chocolate bars in the UK to cover lost revenue caused by higher prices of imported chocolate. The cost to print books jumped from £1.50 ($1.86) per unit to over £3 ($3.72) per unit between June and November, Sam Jordison, codirector of Norwich-based publishing company Galley Beggar Press, told CNBC, adding that the company had been in danger of folding as a result.

Apple raised UK retail prices 20% at the end of October 2016, making MacBooks in the United Kingdom about $275 more expensive than in the United States. Microsoft has announced a similar plan to “harmonise prices” with the EU. The likely implication is that, absent salary increases, British consumers’ buying power will decline next year and onwards, especially as talk of a “hard Brexit” continues to spook traders.

Why it’s interesting: Globalisation has delivered small but incremental increases in buying power to consumers across the board in recent decades. Watch to see whether this trend is fully reversed along with the rising tide of economic nationalism. And double down on delivering more value for less.


Retail naturalism

Technology brands are evolving retail concepts away from cold and minimal shops toward something friendlier and more natural.

Apple’s store on central London’s Regent Street received a major facelift in fall 2016 that features the company’s new “town square” layout, with a central space, the Forum, that hosts daily entertainment. The store showcases the brand’s new design philosophy, which is interactive and community-oriented. A central hall lined with trees, an open layout flooded with daylight, and other natural touches like wooden fixtures and plant walls mark a departure from Apple’s classic, bordering on clinical, aesthetic.

Google’s Manhattan pop-up store, which also opened in October, features similar touches. A massive wooden “fountain of light” takes center stage in the store, anchoring it in a unique architectural feature. There’s also a whimsical play area to experiment with Google’s Daydream View virtual reality headset, and a homey kitchen setup to try Google’s Home line in action.

Increasingly, Apple is working to preserve the architecture of historical buildings, rather than impose contemporary layouts. In February 2016, the New York Landmarks Conservancy gave the company an award for its work protecting New York’s rich architectural history at its locations, including Grand Central Terminal and a Beaux Arts bank on the Upper East Side, where architects preserved the vault. 

Why it’s interesting: Consumers expect more out of bricks-and-mortar retail—whether it’s an experience, or a space worth visiting even when they’re not in the market for a specific product. Apple and Google are admitting that varying their well-honed aesthetic can keep retail spaces fresh.


Productless flagships

When tech giant Samsung opened its new branded space in Manhattan’s Meatpacking District in February 2016, it also set a new precedent for what a flagship store should represent. Samsung 837 is a space that purposely does not stock any products and is not focused on sales. Instead the 40,000-square-foot space is an “immersive culture centre” which allows visitors to experience the Samsung products.

“With Samsung 837, we are creating the flagship of the future,” Zach Overton, vice president and general manager of Samsung 837, said in a news release. “Reimagining the traditional store experience, 837 is a fully immersive cultural center, featuring programming which will tap into people’s passions such art, music, entertainment, sports, wellness, culinary, technology and fashion, all powered and enriched by technology.”

Alex Mustonen, cofounder of architecture practice Snarkitecture, agrees: “Retail is leaning more heavily into a cross-discipline or multi-programmed space, in ways that are unexpected and forward-thinking.” At the end of 2015, Snarkitecture collaborated with Swedish fashion brand COS on a pop-up store in Los Angeles. “The way the space works is against the traditional program of a store; instead we used two-thirds of the space as an unknown reflected showroom and only a third was dedicated to the sales selection,” says Mustonen.

Why it’s interesting: In our Frontier(less) Retail report we found that experiences built in a physical retail store are a big draw for consumers. Samsung 837 offers consumers and fans a space to immerse themselves in the Samsung brand experience, without any hard sell. Is the future of flagship stores productless?


Co-working as a retail destination

“We’re into those who take charge, make noise, and drop-kick the glass ceiling.” This is the mission statement of Argent, a new women’s workwear brand that makes stylish, functional clothes for professional women. The San Francisco-based brand launched in June 2016, and, rather than selling its first collection in a traditional retail store, the founders chose to sell at co-working space WeWork.

Selling their collection at WeWork in San Francisco directly reaches Argent’s ideal audience—independent female freelancers, entrepreneurs and startup employees. In addition, the brand values of WeWork and Argent are aligned; they both want to build a sense of community, empower women and create change. The venue also allows Argent to host networking and career coaching events to enhance the brand’s values and outreach.

Why it’s interesting: It’s time to “drop-kick the glass ceiling” and reconsider the next retail destination. Think beyond the obvious boutique or department store and reach out organically to your target audience in spaces where you’ll be seen alongside likeminded brands.


Convergence payments

Sure, we’ve all heard of one-click retail and autofilled online payment fields. It’s old news. So why do we still find ourselves typing in credit card information all the time?

Finally, the World Wide Web Consortium, which sets the international standards for the World Wide Web, has convened the world’s most prominent tech companies to work out a new solution for online payments, according to the New York Times. It promises to be much smoother and more automatic than existing payment methods.

“There’s a convergence going on,” retail consultant Dave Birch told the New York Times. “In the future you will have one experience—it won’t matter if you are at the store or on the phone. It will pop up on your phone, you will put your thumb on it and you will be done.”

Why it’s interesting: Online shopping, and mobile commerce especially, can be clunky from a user experience perspective, and final purchases often don’t get made because of the sheer hassle involved. It might seem like a minor tweak, but one-touch online payments could seriously help to grease the wheels of e-commerce. 


Gesture payments

While some brands work to streamline present-day online payment systems, others are already thinking about how payment will work on retail platforms that haven’t yet emerged.

Virtual reality offers a potential new platform for retail that could infuse some of the best features of bricks-and-mortar into the online shopping experience. Alibaba is one company looking ahead; its VR Pay system, which could launch as early as the end of 2016, allows shoppers to purchase items in VR stores simply by nodding their heads.

“It is very boring to have to take off your goggles for payment,” Lin Feng, who has worked to help develop the technology, told Reuters. “With this, you will never need to take out your phone.”

There’s already an interested market. A SONAR™ study for our Frontier(less) Retail report found that 59% of Chinese millennials would be interested in trying out clothing in VR, while 57% would be interested in exploring a travel destination.

Why it’s interesting: Emerging platforms like AR and VR are already being used in a retail context. Start thinking about how to process payments on these platforms now, so your brand will be ready when the technologies hit mass adoption.


Shipping wars

Technology companies are ratcheting up the competition in a sector of retail that was, until recently, left mostly to its own devices: Shipping.

On the West Coast, Amazon is experimenting with an in-house delivery service, building the capability to pose a challenge to its long-time partners like the postal service, FedEx and UPS. Although the company does not plan to replace traditional delivery, but rather to “supplement it heavily,” according to Jeff Bezos, a more efficient delivery model could allow Amazon to cut costs below rising UPS rates. Amazon’s shipping costs now consume close to 12% of its revenue, according to the Wall Street Journal, up from 6% in 2010.

Uber is also eyeing the shipping industry with its August 2016 purchase of Otto, a startup that makes self-driving trucks. In fall 2016, the company made its first successful delivery, a 120-mile shipment of cases of Budweiser. While the service pairs nicely with Uber’s other ambitions to develop self-driving cars, autonomous trucking is potentially more practical, as highway driving eliminating variables like pedestrians and stop lights. It may also be more lucrative. Trucking revenue topped $700 billion in 2015, 81.5% of the entire US freight industry, according to American Trucking Associations figures.

Why it’s interesting: Shipping may not be the sexiest aspect of retail, but control of the shipping supply chain could give companies a serious edge in a hyper-competitive delivery market. Consumers are turning up the heat on delivery: According to a survey conducted as part of the Innovation Group’s Frontier(less) Retail trend report, 29% of US millennials and 35% of gen Zers expect items ordered online to arrive in two days or less, while more than 80% of all generations expect shipping to be free.


Platformless retail

Generation Z poses a unique challenge for retailers. As the generation to follow millennials, they will play a huge role in shaping fashion and trends over the years to come. But these young digital natives are proving difficult for retailers. They are brand-agnostic, innately aware of advertising, and demand authenticity at every turn.

Could a platform-agnostic approach help retailers connect? In March, Clique Media Group (publisher of Who What Wear and Byrdie) launched Obsessee, a bold experiment in social media-only publishing. The lifestyle brand, which targets girls ages 14 to 22, has no website, but operates across 10 different social media platforms including Snapchat, Tumblr and Periscope.

“Our brand is not tethered down to Snapchat or a dot com or Instagram,” Clique VP of digital strategy and content Alex Taylor told Fashionista. “She might start focusing her time on Kik and we need to be there.”

Although Obsessee is an editorial experiment, the brand’s focus on a range of social platforms could provide a framework for retail brands seeking to reach always-on generation Z. According to Pew, 71% of American teens use more than one social networking site. While Facebook reigns supreme, a third or more of teens also use Instagram, Snapchat, Twitter and Google Plus.

Brands are experimenting with creating more content designed exclusively for social media. At New York Fashion Week in fall 2016, designer Misha Nonoo opted to stream her latest line as a “live lookbook” on Snapchat, a 24-hour experience in partnership with Refinery29. As more social platforms integrate e-commerce, strategies are becoming more sophisticated: Instagram is now testing shoppable photo ads, while Snapchat ran its first shoppable campaigns from Target and Lancôme in April 2016. 

Why it’s interesting: Pew research shows that 92% of teens go online every day, including nearly a quarter who are online “almost constantly.” Social media platforms are clearly key to winning this demographic. But as teens become increasingly platform-agnostic, retail brands have a chance to expand their scope.


Plus size is a plus

Call it the Ashley Graham effect—or the full force of new-wave feminism. Plus-size retail, once on the fringes, is coming to the fore as empowered consumers seek sophisticated clothing, inclusive imagery, and recognition of their shape.

The average clothing size in the United States is now 16, so there’s a market imperative too. Women’s media platform Refinery29 has already dived in, launching #seethe67%, a new photography collection in partnership with Getty Images; #seethe67% acknowledges that, while 67% of women in the United States are over size 14, they appear in less than 2% of imagery. The platform seeks to normalize images of larger women.

JC Penney added its first-ever plus-size collection for millennial women, Boutique+, in 2016, while Target launched Ava & Viv, a similar initiative, in 2015. The industry is responding to cues from the market, where annual sales of women’s plus-size apparel grew by 17% between 2013 and 2016, compared to just 7% for overall apparel sales, according to NPD Group. Seven7, an exciting size-inclusive line from comedian Melissa McCarthy, comes in a range of sizes from 4 to 28 and has shoppers lining up.

Teens also seem to be more accepting of their own bodies than in the past, and less swayed by unrealistic societal standards than other cohorts at a similar age. NPD found that in 2015, 34% of 13-17-year-old girls had bought plus-size clothing, more than double the 16% who did so in 2010. In part, this is a response to brands such as Torrid, which are finally bringing a fashionable aesthetic to the formerly neglected plus-size category. A standout example is Aerie, American Eagle’s lingerie outlet geared toward the 15- to 25-year-old set.

Why it’s interesting: Brands have been missing out on a huge market, tailoring their imagery and advertising to a constructed ideal instead of reality. In an age of user-generated content, portraying women as they are goes a long way toward convincing them your brand is on their side.


Test-drive culinary retail

Food culture and culinary pursuits remain a key focus for consumers—and now a new wave of retail concept stores is bringing luxury and professional cookware to life. The high-end Pirch kitchen-and-bathroom retailer opened a New York flagship temple to cookware in 2016 which offers kitchen demos with chefs and allows visitors to experiment with ovens and equipment installed as though in a real home.

The store is designed to “ignite inspiration and fuel discovery,” says CEO and cofounder Jeffery R Sears, and contains 30 interactive kitchen and bathroom displays in a three-story, 32,000-square-foot space. Bloomberg describes it as “theme park” retail: Take your dog along to try out the pet spa and enjoy a coffee or a glass of wine as you browse.

Zwilling, the German specialist in knives, cookware and cutlery, has launched a new culinary concept store in Shanghai, set in a groovy industrial-style space with atmospheric lighting and exposed brick walls. Chefs demonstrate the items, preparing food on long marble counters in the center of the store. Visitors can also use the equipment, testing their knife skills in the polished concrete kitchens. Guest celebrity chef appearances add to the buzz.

Why it’s interesting: As experience culture becomes pervasive, retail stores are trying to make their physical stores more immersive, on the grounds that the longer a customer spends with the company, the more likely they are to buy something. The events at these culinary temples also provide convivial reasons to visit. These stores are entertaining weekend destinations; and if you buy a bathtub or refrigerator afterwards, all the better.

Genre: PR , People , Strategy/Insight